Mustang gallops into Manchester

Mustang Minerals (YMU-T) has inked a deal to explore for nickel on Inco‘s (N-T) Manchester property covering a 2.5-km stretch of the Manchester Offset dyke on the south range of the Sudbury igneous complex.

Under the deal, Mustang can take a 60% interest in the property by funding $1.35-million worth of exploration over 4 years, with at least $200,000 coming in the first year. Mustang will also issue Inco 500,000 shares. Mustang can boost its stake to 70% by completing a bankable feasibility study.

However, Inco can regain a 70% stake in the project should Mustang’s study outline a deposit containing at least 300 million lbs. nickel. To do so, Inco must solely fund the property through to commercial production. The major also has the right to buy product from the property at arm’s-length commercial terms.

Limited exploration of Manchester by Inco since the early 1970s has yielded several nickel intersections. Mustang will immediately launch a drill program to follow up on these and other areas prospective for platinum group elements. The junior also plans a program of geophysics followed by drilling over the entire offset dyke.

The current deal also grants Inco the right to purchase product from Mustang’s Nairn and Hyman nickel and platinum-group-element (PGE) prospects west of Sudbury.

The 16-sq.-km Nairn property covers about 8 km along strike to the southwest of Tearlach Resources‘s (tea-v) Mystery Offset dyke property, which is in turn adjacent to Inco’s past producing Totten mine. In early 2001, Inco announced a resource of 10.1 million tonnes running 1.5% nickel, 1.97% copper and 4.8 grams combined palladium and platinum per tonne, on an extension of Totten’s known ore body.

The 12-sq.-km Hyman property is home to a 200-by-900-metre induced polarization conductor, which is associated with historical nickel showings across a 4.5-km strike length. Mustang is in the midst of sinking 600 metres worth of drilling to test for nickel, copper and PGE mineralization associated with gabbro-rich rocks.

Meanwhile, drilling to test several geophysical targets on the recently optioned Bannockburn nickel project, 100 km southeast of Timmins, will begin later this month.

Mustang can acquire the property from Outokumpu Mines by spending $350,000 on exploration and paying $100,000 in cash. The property is subject to an underlying net smelter royalty.

Outokumpu outlined Kambalda-style massive and heavily disseminated sulphides in footwall embayments at the base of komatiitic flows on the property. The Finnish company also outlined mineralization similar to Mt. Keith-style disseminated sulphide mineralization.

Mustang shares plummeted 11, or nearly 20% of value, to 46 in early trading in Toronto following the news.